The News Herald (Willoughby, OH)

Stocks rally on hopes for vaccine, economic recovery

- By Alex Veiga

The stock market bounced back from its worst week in nearly two months Monday as optimism about a potential vaccine for the coronaviru­s and hopes for a U.S. economic recovery in the second half of the year put investors in a buying mood.

The S&P 500 climbed 3.2%, its best day since early April. The gains erased all of its losses from last week, when the index posted its worst showing since late March and its third weekly loss in the last four. Bond yields rose broadly in another sign that investors were becoming more optimistic.

Stocks were already headed for a higher opening on Wall Street when a drug company announced encouragin­g results in very early testing of an experiment­al coronaviru­s vaccine. The stock of the company, Massachuse­tts-based Moderna, jumped 20%.

Investors were also encouraged by remarks over the weekend from Federal Reserve Chair Jerome Powell, who expressed optimism that the U.S. economy could begin to recover in the second half of the year. Once the outbreak has been contained, he said, the economy should be able to rebound “substantia­lly.”

The S&P 500 gained 90.21 points to 2,953.91. The benchmark index is still down 12.8% from its all-time high on February 19.

The Dow Jones Industrial Average climbed 911.95 points, or 3.9%, to 24,597.37. The Nasdaq composite rose 220.27 points, or 2.4%, to 9,234.83. Small-company stocks fared better than the rest of the market. The Russell 2000 index picked up 76.70 points, or 6.1%, to 1,333.69.

Investors are hoping that a working vaccine for COVID-19 can be developed and that it will help reassure people and businesses as the economy reopens.

“The question of how quickly people come back, or will they come back to the way they used to do things, that’s much different if you have a vaccine,” said Megan Horneman, director of portfolio strategy at Verdence Capital Advisors.

Traders are also encouraged that, so far at least, there hasn’t been a lot of data implying the reopening of the economy is going to lead to a resurgence in the number of COVID-19 cases, said Sam Stovall, chief investment strategist at CFRA.

“Of course, because we are responding to impression­s, we could end up giving back some of these gains should additional informatio­n contest our beliefs,” he said.

Technology, financial and industrial stocks accounted for a big slice of the broad gains, along with companies that rely on consumer spending. Energy stocks also rose as the price of U.S. crude oil closed above $30 a barrel for the first time in two months. Oil production cuts are kicking in at the same time that demand is rising as the U.S. and other countries ease some of the restrictio­ns aimed at stemming the spread of the outbreak.

Benchmark U.S. crude oil for June delivery jumped 8.1% to settle at $31.82 a barrel. July Brent crude oil, the internatio­nal standard, vaulted 7.1% to $34.81 a barrel.

Bonds yields rose, another sign that pessimism was diminishin­g. The yield on the 10-year Treasury note, a benchmark for interest rates on many consumer loans, rose to 0.72% from 0.64% late Friday.

Fears of a crushing recession due to the coronaviru­s sent the S&P 500 into a skid of more than 30% from its high in February. Hopes for a relatively quick rebound and unpreceden­ted moves by the Federal Reserve and Congress to stem the economic pain fueled a historic rebound for stocks in April.

May got off to a downbeat start as investors balance cautious optimism of a recovery as economies around the world slowly open up again against worries that the moves could lead to another surge in coronaviru­s infections and more economic uncertaint­y.

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